Harrell and Nesland

[2015] FCCA 1231

FEDERAL CIRCUIT COURT OF AUSTRALIA

HARRELL & NESLAND [2015] FCCA 1231

Catchwords:
FAMILY LAW – Costs – application for costs – applicant seeking costs of jurisdictional issue – whether justifying circumstances to make a costs order – whether there are circumstances for a departure from Schedule 1 of the Federal Circuit Court Rules2001.

Legislation:

Family Law Act 1975, ss.117(1), 117(2), 117(2A)

Family Law Rules 2006

Federal Circuit Court Rules 2001, rr.21.02, 21.02(2)(a), 21.10, Schedule 1

Cases cited:

Hamlin v The University Of Queensland (No.3) [2013] FCCA 1129
Penfold v Penfold (1980) 144 CLR 311

Applicant: MS HARRELL

Respondent: MR NESLAND

File Number: BRC 6489 of 2012

Judgment of: Judge Jarrett

Hearing date: 30 September 2014

Date of Last Submission: 30 September 2014

Delivered at: Brisbane

Delivered on: 13 May 2015

REPRESENTATION

Solicitor for the Applicant: Mr Love

Solicitors for the Applicant: Matthew Love Lawyers

Counsel for the Respondent: Mr Kirk QC

Solicitors for the Respondent: Hirst & Co

ORDERS

1. The respondent pay the applicant’s costs of and incidental to the trial that took place on 23, 24, and 26 April, 2013 fixed in the sum of $18,694.60 together with any hearing fees paid by the applicant in respect of that trial.

IT IS NOTED that publication of this judgment under the pseudonym Harrell & Nesland is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRC 6489 of 2012

MS HARRELL

Applicant

And

MR NESLAND

Respondent

REASONS FOR JUDGMENT

1. On 13 November, 2012 I ordered, at the urging of the respondent, that the issue of whether this Court had jurisdiction to determine the applicant’s claim for property adjustment orders be the subject of a trial to take place in April, 2013.  In the principal proceedings, the applicant claimed that she and the respondent had been in a de facto relationship that had ended such that this Court had jurisdiction under the Family Law Act1975 to make property adjustment orders between them.  The respondent denied that the parties’ relationship did not finally break down before 1 March, 2009 and claimed that the Court was, consequently, without jurisdiction.

2. By a judgment that I delivered on 26 August, 2014 I found that the parties’ de facto relationship had not finally broken down before 1 March, 2009.  I made the following declarations:

   (1) Pursuant to ss.90RD(1) and (2) of the Family Law Act 1975, that:

   (a)     a de facto relationship existed between the parties;

   (b)     such relationship commenced in October, 1997; and

   (c) such relationship did not finally breakdown before 1 March, 2009.

3. By this application, the applicant seeks an order for costs of the trial of the jurisdictional issue.  More particularly, she seeks orders that:

   a)Pursuant to Rule 21.02 of the Federal Circuit Court Rules2001 the respondent pay the applicants costs, of and incidental to, the hearing of 23, 24 and 26 April 2013;

   b)Costs are paid in an amount fixed by the Court pursuant to Rule 21.02(2)(a);

   c)In the alternative, that the Court orders costs to be assessed under Chapter 19 of the Family Law Rules 2006.

4. The application is made pursuant to s.117(2) of the Family Law Act1975 (Cth). Section 117(1) sets out the general rule that ordinarily each party to proceedings under the Act shall bear his or her own costs. Section 117(2) provides the Court with a discretion to make another order as to costs if it thinks in the circumstances of the case it should do so. The matters relevant to the exercise of that discretion are set out in s.117(2A) of the Act. Section 117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order for costs: Penfold v Penfold (1980) 144 CLR 311.

5. Here the applicant argues that the following matters are relevant to the exercise of the discretion:

   a)there is a significant disparity between the financial positions of the parties.  She argues that her resources are limited whereas the respondent’s resources are far greater.  In particular, she points to evidence in the trial to the effect that since the parties’ separation the respondent had sold a business in which he had an interest for $1,300,000.00 and since that time has continued to have access to a weekly income;

   b)the applicant has incurred party and party costs of $60,212.35 to the date of the application;

   c)the respondent was wholly unsuccessful on the issue that was litigated in the trial;

   d)the applicant made an offer of settlement on 19 December, 2012.  The terms of the offer, quite properly, have not been disclosed.  I accept that it was likely that acceptance of that offer would have seen the parties settle the property adjustment application in its entirety without the separate jurisdictional hearing.

6. The respondent seeks that:

   a)the costs issue be reserved until the conclusion of the proceedings so that he can rely upon offers of settlement made by him on 17 September, 2012 and/or 14 December, 2012; or

   b)alternatively, that there be no order as to costs for the applicant but that the respondent’s costs be reserved.

7. The respondent contends that the significant matter that informs a decision to reserve the costs is that settlement offers have been made by the respondent to resolve all issues in the proceedings.  That being so, the respondent contends that it would be inappropriate at this stage to disclose the terms of the offer and a decision about costs should not be made until the proceedings have been concluded.

8. Alternatively, he contends that this is one of those cases where each party ought to bear their own costs of the discrete issue that has been determined.  In particular, the respondent points to my reasons for judgment and my finding that the parties’ relationship was “a most unusual relationship”.  He suggests that there was an understandable uncertainty, justifying the trial as to whether what existed of this relationship post 1 March, 2009 fell within the statutory definition of de facto relationship.  In particular, I was directed to:

   a)the applicant’s own description of her status in June, 2005 on her visa application as “divorced” rather than “defacto” and that she could not explain why she had not told the respondent of her intention “to retire”;

   b)my finding of what the applicant told another witness, Ms G, about her relationship with the respondent; and

   c)what the applicant told a friend of hers in March, 2012 to the effect that she and the respondent “we’re just business now”.

9. The respondent argues that the material demonstrated a need for a hearing and determination of the nature of the parties’ unusual relationship where the statutory definition leaves much uncertainty.

Consideration

1. In my view, there is much force in the argument that the respondent was wholly unsuccessful in the proceedings on the jurisdictional issue.

2. The issue of jurisdiction was tried separately at the insistence of the respondent.   The issue was determined entirely against him.  The outcome of the trial was always to be a finding that either accorded with the applicant’s contention or that accorded with the respondent’s contention.  As it turned out, it favoured the applicant’s contention.  It was not a case where there could be a finding which accommodated the positions of both of the parties.  Neither party contended for such a position.

3. The respondent’s arguments about the unusual nature of the relationship and the difficulties with the applicant’s own evidence do not assist his opposition to the orders sought by the applicant.  As the evidence demonstrated, the applicant’s contentions were open on the evidence and ultimately carried the day.  It is not to the point that the respondent also had an arguable case.

4. The respondent’s lack of success is of significant weight in favour of an order for costs.  It also tells against the reservation of costs.

5. The existence of offers of settlement is of no moment.  According to the submissions of both parties, their offers, if accepted would have disposed of the whole proceedings.  On any of the offers it must have been that the Court’s jurisdiction was conceded.  The only offer of which I can conceive on behalf of the respondent which is consistent with his case put in the trial before me would be that the application be dismissed (perhaps with or without an order for costs).  The outcome of the trial was to the opposite effect.  Whilst the offers of settlement may perhaps be relevant to the question of the costs of the proceedings other than the trial of the jurisdictional question, in my view, they are not relevant to the issue I have to determine.

6. Ultimately, I consider the fact that each of the parties might have made offers to compromise the whole of the proceedings to be a neutral matter when it comes to determine the present application for costs.

7. That the respondent was wholly unsuccessful on the jurisdictional point is a significant justifying circumstance in favour of an order for costs against the respondent.  I am unpersuaded that no order for costs is appropriate.

8. I also consider that it is inappropriate to reserve the costs to the final determination of the proceedings.  As it turns out, that has occurred before another judge of this Court.  Irrespective of the outcome of the proceedings at the final hearing, the issue of costs of the trial of the preliminary issue should be determined by me.  I record that I have received correspondence form the respondent’s Queen’s Counsel alerting me to the fact that the principal proceedings have now been concluded by a trial and judgment.

9. In my view, the respondent should pay the applicant’s costs of and incidental to the hearing that took place on 23, 24 and 26 April, 2013.

The assessment of costs

1. The applicant submits that given the complexity of the matter, the duration of the hearing and the number of witnesses called, it is appropriate to set the amount of costs with reference to the legal fees outlined in the applicant’s affidavit filed on 16 September, 2014.  In that affidavit she claims the sum of $60,212.35 calculated on a “party and party” basis in accordance with the fee agreement that she has with her solicitor.

2. She further submits that in the event that I do not wish to set costs on a party to party basis by “reference to the applicant’s affidavit, then we respectfully submit that your Honour has the power to refer costs under Chapter 19 of the Family Law Rules 2004 given the complexity of the matter and the fact that it was a discreet hearing on a single issue”.

3. The applicant’s submissions avoid altogether the starting point which is that this Court should apply the scale of costs prescribed in Schedule 1 to the Federal Circuit Court Rules2001. Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to costs in accordance with Parts 1 and 2 of Schedule 1 to the Rules and disbursements properly incurred: FCCR 21.10.

4. Apart from the submission that the matter was “complex”, no other submissions were advanced to support an order that costs be assessed otherwise than according to Schedule 1.

5. The proceeding took three days to hear.  There were a number of witnesses.  But the exercise was essentially a fact finding exercise.  I reject the proposition that the case was complex.  If indeed the case was one that was complex and justifies an order for party and party costs, either according to the solicitor’s costs agreement or the Family Law Rules, one might have expected to see application made to transfer the proceedings to the Family Court of Australia.  But no such application was made.

6. In my view, no sufficient reason has been demonstrated to justify a departure from the assessment of costs pursuant to Schedule 1 of the Federal Circuit Court Rules.

7. I assess those costs as follows:

Stage	Description	Amount
1	Initiating or Opposing Application up to completion of first Court day	$1,994.00
1	Court attendance – 13 November 2012 (short mention)	$271.00
7	Preparation for hearing – 2 day matter	$5,270.00
8	Preparation for hearing – additional day	$1,128.00
2	Daily hearing fee x 3 23, 24 and 26 April, 2013 (including advocacy loading)	$8,973.00
Sub-total	$17,636.00
Disbursements:
Court filing fees	$100.00
Agency Fees	$210.00
Conduct Money	$339.10
Photocopies	$274.50
Facsimile	$135.00
Total:	$18,694.60

1. As to the above assessment, I observe that:

   a)I consider it appropriate to include an item for stage 1 and a hearing fee for the mention date when the application was set down for hearing on the jurisdictional issue;

   b)I have accounted for disbursements by reference to the tax invoices in the applicant’s evidence;

   c)I have not provided for Counsel’s fees as a disbursement: Hamlin v The University Of Queensland (No.3) [2013] FCCA 1129;

   d)I have not provided for parking fees or travel time given that the applicant’s solicitor practices from (omitted); and

   e)I have been unable to ascertain what, if any, hearing fees have been paid by the applicant in respect of this trial.

Conclusion

1. The respondent must pay the applicant’s costs of and incidental to the trial that took place on 23, 24, and 26 April, 2013 fixed in the sum of $18,694.60 together with any hearing fees paid by the applicant in respect of that hearing.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Jarrett

Date:       13 May 2015